标题: Doubt from Reading "Working Capital Management" [打印本页] 作者: kim226 时间: 2011-8-28 08:12 标题: Doubt from Reading "Working Capital Management"
Hi all,
I was going through the end of reading questions from Reading 48 i.e. "Working Capital Management"
In Questions 2 & 3, for the calculation of Inventory turnover, just the Inventory Ending Balance has been considered instead of the Average Inventory i.e. (Beginning Balance + Ending Balance) / 2
Isn't this incorrect?作者: OmarAdnan 时间: 2011-8-28 08:18
yes this is correct .
inventory turnover might be calculated using formula prescribed above because the information in the question would be limited ( avg inventory could not be calculated ), so in scenario when the information is limited , you can calculate use the formula given above . else vice versa( if complete information provided you have to take avg inventory for calculating Inventory turnover)
Cheers作者: Iginla2010 时间: 2011-8-28 08:23
yes this is correct .
inventory turnover might be calculated using formula prescribed above because the information in the question would be limited ( avg inventory could not be calculated ), so in scenario when the information is limited , you can calculate use the formula given above . else vice versa( if complete information provided you have to take avg inventory for calculating Inventory turnover)
Cheers作者: liquidity 时间: 2011-8-28 08:29
Hi Manankhan,
In the question both Beginning Inventory Balance and Ending Inventory Balance was given, so I was just wondering on why the calculation was done that way.
